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Costco Battles For Cheaper Booze In Wash. State

Georgia LaBelle reaches for a bottle of wine as she shops at a Costco warehouse store in Seattle. Costco is putting financial muscle behind a Washington ballot initiative to do away with state-run liquor stores.AP

A Washington state ballot measure that would change how alcoholic beverages are sold has produced some strange bedfellows.

Firefighters and church groups have teamed up with beer distributors to fight a proposal that would do away with state-run liquor stores and eliminate price controls in the sale of wine and beer.

If you want to buy hard liquor you have to go to one of 315 state-sanctioned liquor outlets where the hours are relatively limited and the prices are high. A standard handle of Smirnoff vodka costs $30.

That same bottle costs just $16 at Costco stores in California, and the giant retailer wants to offer similar prices in Washington state. So, Costco has put a lot of money and muscle into getting Initiative 1100 on the November ballot and getting it passed.

"It is a matter of principle," says Joel Benoliel, a senior vice president at Costco. "Part of what we are known for is being pro-consumer, and when we identify places where they are being gouged, we think it's incumbent on us to stand up for our consumers."

There’s a profit motive too, which Costco readily acknowledges. The so-called Costco initiative has support from some large retailers, grocery outlets and big-name restaurateurs.

One ad broadcasts this message: The initiative "means new jobs; 1100 helps restaurants compete in a tough economy. It's good for the Washington wine industry too -- convenience, choice and lower prices. We are voting yes on 1100."

On the other side of the debate is a group called Protect our Communities. It doesn't want alcohol to become easier to obtain.

One of its ads features a firefighter EMT. The ad urges a "no" vote on 1100 and a related measure, Initiative 1105: "These initiatives mean 10 times as many stores selling alcohol including 24-hour gas stations and minimarts."

But the ad doesn't tell you who is really funding this campaign. Firefighters, church groups, government officials and others oppose the initiatives, but the big money in the "no" campaign is coming from beer and wine distributors. That's because distributors have a lot to lose if the existing rules that grant them a certain amount of monopoly power are abolished.

Alice Woldt, executive director of the Washington Association of Churches, acknowledges the campaign acquired some strange bedfellows in its quest for campaign funds to fight against the initiatives.

Washington is one of roughly 20 states that exercise broad control in the sale of alcohol. But it's the only one that has a November ballot initiative that would take some of that power away and deregulate the sale of alcoholic beverages.

Nationwide, beer distributors are nervous. They fear that if deregulation prevails on the ballot, the push to deregulate alcoholic beverage sales will spread across the country. The beer industry is contributing millions of dollars to fight these initiatives. Costco is spending millions as well.